Rewarding Tenants Can Make Good Cents
Successful companies know how important it is to pay attention to their customers. To keep clients happy and encourage a continuing relationship, they provide gifts, discounts, and more. They go the extra mile with rewards to promote continuing income.
Without a tenant, you have no income (and carrying expenses that you must cover from your own pocket); the tenant IS the client. Your investment IS a business. When you treat it as one, you realize that it may be profitable to provide additional rewards for good tenancy to increase your return on investment (ROI).
A tenancy begins with a contract between you and the tenant. The tenant agrees to pay their rent on time and take reasonable care of the property. You agree to reasonable rent expectations and maintaining the property in a safe and habitable condition. If both parties live up to their agreement, there should be a successful tenancy.
If everyone is living up to their contractual agreement, why consider providing additional rewards? Because rental markets are volatile, swinging up and down just like the stock market. It pays to remember that while you may be king one month (when there are few rentals available), the market will swing and give more control to the tenant the next (when there are many rentals available). Rewards or incentives can make a difference to tenants when they considering renewing their lease, continuing their month-to-month agreement, or moving.
Tenants are more mobile than homeowners are, and they consciously or subconsciously make judgments. If you motivate them enough, they will move. If they see that you held up your end of the rental agreement and provided unexpected rewards, they will be less inclined to move. On the other hand, if they feel their current rental is not worth the hassle, they will consider moving.
Did you authorize the repairs they requested? Are you reluctant to do the little maintenance items, ignoring the fact that the tenants must live with them every day? Do you wait until they become a big problem and major inconvenience?
There is also the human element to consider. People like respect and attention. When you uphold the tenants' right to occupy the property without unexpected intrusions, listen to all requests, and provide additional incentives, the landlord/tenant relationship is stronger.
Fewer property turnovers = less expense + increased return on investment (ROI).
There are so many small ways to reward tenants throughout the year. Sometimes something simple, such as a thank you note for their cooperation during difficult maintenance issues, can help. It could be the installation of a ceiling fan, a free cable connection, a gym membership, a gift certificate for a local grocery store, or the promise of a turkey or ham during the holiday season.
Some rewards can be more expensive, but well worth the expense. For example, a new energy-efficient dishwasher can save the tenant money on utilities and help to reduce their monthly costs. This can also make it much easier to issue a reasonable rent increase. Remember, these expenses, small or large, are tax-deductible if legitimately spent on the investment property (just keep accurate records).
Consider how rewarding your tenants can improve your landlord/tenant relationship increase your bottom line, and work it into your current and future investment budget.